PLEASE EXPLAIN HOW YOU'RE GETTING ANNUAL FIXED COST FROM HENRI'S SIDE AND VALUE-BUY SIDE

Problem 1. (100 pts. Each part is worth 25 pts) Henri of Henri's French Cuisine (HFC), a chain of twelve restaurants, is trying to decide if it makes sense to outsource the purchasing function. Currently, Henri employs two buyers at an annual fixed cost of $45,000 per employee. Henri's estimates that the variable cost of each placed purchase order is $15. Value-Buy (VB), a group of purchasing specialists, will perform the purchasing function for a fixed annual fee of $100,000 plus $5 for each purchase order placed. Last year, HFC placed 1450 purchase orders and averages $182 income per order. (a) Construct a base-case spreadsheet model that shows both of these alternatives side-by-side. Keep in mind the ABC's of good spreadsheet modeling. Use the same number of orders (stored in a single cell) to drive the calculations. (6) Using last year's quantity of purchase orders, which alternative would have been the better? Type your answer in the space provided in Excel (Cell J16)